India′s aviation industry hits turbulence | Asia| An in-depth look at news from across the continent | DW | 12.06.2012
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India's aviation industry hits turbulence

Air India (AI), once the nation's pride, is now gasping for breath. The national carrier is experiencing financial difficulties and staff protests over non-payment of salaries.

The past month has been the most serious in Air India's troubled history with over 400 pilots going on strike and thus disrupting domestic and international schedules, causing huge financial losses and inconvenience to travellers.

Negotiations have failed consistently. Management has acted with a heavy hand; first sacking 110 pilots, who are members of Indian Pilot Guild (IPG), and now considering plans to send off termination letters to about 300 more pilots.

An Air India Boeing 747

The future of India's aviation industry is up in the air

"These pilots have not come to work for more than 30 days," said Indian Civil Aviation Minister Ajit Singh on Monday. "It's an illegal strike. So it's for the management to decide how long they can keep them on the payroll, when they are not working, and they have no intention of coming back."

The striking pilots have been protesting against airline policy to train pilots from Indian Airlines, which merged with Air India in 2007, to fly the Boeing 787 Dreamliner that is due to go into service later this year.

They also demand payment of salary arrears outstanding from 2007, first-class travel when not working and the right to be promoted to pilot commanders within six years.

Rising losses across the sector

It is not only Air India that is in the red. The mounting debts carried by India's other airlines due to unproductive operations have pushed the domestic aviation industry to the edge. Close watchers of the sector point out that five out of six Indian carriers are bleeding money.

A recent report by the International Air Transport Association said high oil prices and the limited ability of airlines to raise their prices due to strong competition and overcapacity had left operators with high debts.

Air travelers stand in a queue for information

The strikes are disruptive for travelers

Until last year, Kingfisher Airlines was the second-largest operator after Air India but now it has the lowest market share, has been forced to cancel several flights and could go bankrupt. It ended all international flights in 2011.

"India may be one of the fastest growing aviation markets in the world but its airlines may lose a total of 2.5 billion US dollars in the year ending March 2012 because of high operation costs due to rising aviation fuel prices and price wars," Captain Pradeep Kumar of Air India told DW.

The way forward

The government is therefore actively considering a proposal that would allow foreign airlines to buy stakes of up to 49 percent in India's airlines.

Civil aviation expert V. K. Mathur, a former chairman of the Airports Authority of India, believes the government must divest its equity stake in the cash-strapped and debt-ridden national carrier.

"I really see no option than this. That alone will enable airline managements to look at maximising their priorities and not look at maximising other agendas that have nothing to do with airlines," he told DW.

Civil aviation observers emphasize that radical steps are necessary to help carriers come out of the deep financial crisis. If these are not taken, some domestic carriers may be grounded for good.

Author: Murali Krishnan
Editor: Anne Thomas

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